Russia and Greece consider collaborating to circumvent Western sanctions

As Russia and Greece each endure strained relations with the rest of Europe, their leaders have been pondering how they might collaborate to sidestep their Western neighbors’ sanctions and censure.

With his Balkan nation on the brink of economic collapse, Greek Prime Minister Alexis Tsipras on Friday paid his second visit in less than three months to Russian President Vladimir Putin to sign a lucrative pipeline construction deal and, presumably, to discuss what European Union member Greece might do to ensure that Russia receives relief from sanctions when current ones expire next month.

Kremlin officials denied that Tsipras asked for financial aid during his meeting with Putin on the sidelines of the annual St. Petersburg International Economic Forum. But two senior officials had said before the meeting that Moscow was open to considering a loan to help Athens avert default on bailout obligations due to international creditors.

In his address to the annual gathering of multinational chief executives and Russian oligarchs, Tsipras blamed the misguided European Union policies for the Greek economic crisis.

“The EU should go back to its initial principles of solidarity and social justice,” Tsipras, a former communist, said in lambasting austerity measures imposed on Greece in exchange for its $270-billion bailout, mostly financed by EU colleagues. “Ensuring strict economic measures is leading us nowhere. The so-called problem of Greece is the problem of the whole European Union.”

Tsipras cast Greece as a ship navigating troubled waters as it faces a June 30 deadline for a $1.8-billion loan payment that it can’t cover without borrowing more. Athens’ creditors are refusing to provide additional cash until the far-left government, which took power in Greece in January, comes up with a credible plan to straighten out domestic finances.

“We are now in the middle of a great storm,” Tsipras told the St. Petersburg gathering. “But we are a seafaring nation that knows how to navigate through storms and is not afraid of heading to new seas and reaching new harbors.”

The quest for new refuge sounded to many like an appeal for a Russian loan to help Athens with the looming debt payment. But Kremlin spokesman Dmitry Peskov told journalists that Tsipras made no appeal for direct financial aid during his meeting with Putin.

The Greek leader did go home with a $2.77-billion deal to get in on Russia’s impending mega-project to reroute natural gas deliveries to Western Europe through Turkey, bypassing Ukraine, where many of Moscow’s pipelines are routed. Relations with Ukraine have deteriorated severely since Moscow’s seizure of the Crimean peninsula last year and its support for pro-Russia separatists occupying two large regions of eastern Ukraine.

Greece and its major lenders — the International Monetary Fund, the European Central Bank and the European Commission — have been deadlocked in talks aimed at drafting a new plan for reducing the staggering debt carried by Athens. The latest negotiating session, on Thursday, ended with no progress toward an agreement and harsh words from the creditors over Athens’ failure to bring new proposals to the table.

The fruitless meeting in Luxembourg lasted less than an hour, and its failure to break a weeks-long impasse prompted the European Union to call an emergency summit for Monday night to discuss ways to avert fiscal implosion in Greece — or how the remaining Eurozone states can guard against damage to their own economies if the currency union suffers its first dropout.

Greeks have already begun pulling their euros out of Greek banks, with at least $3.4 billion worth withdrawn last week, the Greek news site ekathimerini.com reported.

The run on deposits prompted the Bank of Greece to appeal to the European Central Bank on Friday for a $3.95-billion emergency liquidity infusion to ensure that banks can open Monday.

Russia is suffering its own economic crisis because of sanctions imposed by the European Union and the United States over its aggression in Ukraine. The Russian economy has also been hit hard by the past year’s sharp drop in the price of oil, on which the Kremlin depends for more than half of its annual budget.

Any Russian assistance to Greece could pay off for the Kremlin, though, as Athens might be persuaded to withhold approval of a planned extension of sanctions when the current ones expire next month. Under European Union rules, all 28 member nations have to approve such actions, and Tsipras has been harshly critical of the sanctions that have triggered Russia’s retaliatory boycott of European food exports.

carol.williams@latimes.com